Dollar strengthens on Powell’s caution meanwhile Kiwi weakens post-dovish central bank

Powell highlighted a cooling job market, indicating that the Fed faces “two-sided risks” and cannot focus solely on inflation. This statement underpinned the dollar’s rebound, with the dollar index (DXY), which measures the U.S. currency against six major peers including the euro and yen. It had previously dipped to its lowest level since June 13, following unexpectedly soft U.S. payrolls data.

For New Zealand, the central bank’s confidence in inflation control and potential for rate cuts could lead to a weaker kiwi in the near term. This could benefit exporters by making their goods cheaper on the international market, but may also signal economic challenges ahead if the rate cuts are a response to slower growth.

Read here to find out more about the New Zealand dollar market insights.